haidi: you are watching "daybreak: asia", do you live from sydney and hong kong. annabelle: we are counterproductive asia's market opens. shery: and the top story at this hour -- the fed chair gives his most explicit acknowledgment yet that the u.s. could face recession, saying that a soft landing will be very challenging. >> -- have made it more difficult for us to achieve what we want, which is 2% inflation and still a strong labor market. shery: that warning set to play on asia markets along with losses wall street and a rally in treasuries. china's president slams the suffering caused by sanctions, accusing some nations of weaponizing the world economy. u.s. futures continue to extend losses after we saw the s&p 500 fall, warning of the risk of recession not sitting well with the markets.

energy leading declines. oil continues to extend the declines we saw in new york, already at the lowest in a month. we also had the former new york fed president bill dudley say that recession is actually inevitable. treasury futures at the moment are not doing much, the 10-year yield actually fell towards the 3.15 level. annabelle: the rally in treasuries is certainly setting the tone for trading in asia as well. we are looking ahead to a mixed start. the asx 200 pointing higher this morning, but we will be watching the prices of commodities. you mentioned oil, but there's also key metals like copper. declines could limit any rebound that we see here. chicago futures are pointing lower this morning, 21 of 33 sectors closing in the red in chicago nikkei futures. we can expect more fluctuations,

markets are likely to move up and down at a considerable range. volatility also takes us into the yen, it remains the major currency with the highest potential for swings. traders are betting that it is not going to lose its crown anytime soon because demand for low delta exposure in the yen is by far the highest among its g10 peers. haidi: let's get more on those comments out of jay powell at the senate banking committee. take a listen. >> is our goal. it is going to be very challenging. it has been made significantly more challenging by the events of the last few months, with the war and commodity prices and further problems with supply chains. the question of whether we are able to accomplish that will depend on some factors that we don't control. haidi: joining us is bloomberg's economics chief u.s. economist anna wong. how do you interpret those comments from jay powell?

anna: i think jay powell is consistent with what he said last week, the hawkish tone from his comments last week that the fed is serious about getting inflation under control, whatever it takes. i think in this testimony, he demonstrated a newfound openness about acknowledging that demand played a role in generating the uniquely high inflation in the united states. previously, he has mostly blamed it on supply chain bottlenecks. but the implications of him acknowledging that demand plays a role, with the fed being mostly in control of demand tools, it means that the fed has the calling to be more hawkish with rate hikes, in order to bring down demand to lower inflation. shery:. shery: we have also been hearing a lot today including from patrickharker and charles evans

not to mention the former new york fed president bill dudley. what were some of the takeaways especially when it comes to the potential recession ahead? anna: bill dudley is actually a bloomberg economics advisor, so i know him quite well. he is saying that recession is inevitable. but he does see some momentum still in the u.s. economy, such that recession is not right around the corner. but given the inflation challenge, the fed will have to go higher, he thinks, and that will be why the u.s. economy will likely enter into a recession to 18 months from now. i think it is noteworthy that those two who are rated in our spectrometer as either dovish or leaning towards dovish, both of them are on board with hiking

rates all the way beyond the neutral of 2.5%. just a month ago, they were saying, we are going to hike up to 2.5% and stop and look around. but i think that ship has sailed. all of the fed participants are now on board with rates being at 3% to 3.5% by the end of this year. shery: bloomberg's anna wong joining us from washington with her take on fed chair powell's senate testimony. and of course, we also heard about global economic pain from chinese president xi jinping. he criticized sanctions for stoking those billions in a speech kicking off this year's brics summit. take a listen. >> politicizing, instrumentalist and weaponizing the world economy using a dominant position in the global financial position to wantonly impose sanctions will only hurt others, as well as hurting oneself. leaving people around the world suffering. shery: president xi jinping also

looking to bolster relations with emerging markets amid strained western tides. for more, let's bring in our senior executive china editor, jean -- john liu. we call them brics because they are emerging economies, but also they are related to the u.s. what is the message president xi was trying to send? john: i think china sees geopolitics no matter where it is around the world in the lens of beijing vis-a-vis washington. i think with the invasion of ukraine, xi jinping is using this opportunity to speak to this audience in the emerging markets which may be did not have that much skin in the game when it came to ukraine but is now feeling the repercussions of not only the sections, but of higher commodity and food prices as a result of the invasion, trying to speak to the audience and gather support for china's

position which is diplomatically supporting russia. but also, trying to put much of the blame for the conflict on the u.s. when it comes to nato and its expansion in eastern europe. haidi: we know that there are expectations for a -- in coal sometimes this summer. are the tariffs on china likely to be reviewed at this point? john: all the noise that we are hearing out of washington at the moment is that yes, there -- they will be reviewed and likely a portion of the tariffs will be in a way that will help the u.s. in terms of inflation, family president biden some room domestically as we go into the midterms. that should be a point of discussion when the two leaders meet. obviously, china would like to see the structures lowered, especially with the economy as weak as it is right now. shery: let's talk a bit about the economy, because it seems china once to continue to ease

up on regulations, especially around the fintech sector as well. -- china wants to continue to ease up on regulations. what do we know? john: xi jinping yesterday also spoke at a committee to deepen reform yesterday. and there, he talked about supporting the platform economies, sort of a way of talking about big tech. obviously, companies like tencent and alibaba have suffered from the crackdown on anticompetitive behavior and other things. but they are large, important employers and as jobs become scarcer and the economy slows, china needs those companies to step up and help with the unemployment situation. haidi: bloomberg's greater china senior executive editor, john liu. let's get to vonnie quinn with the first word headlines. vonnie: thank you. european union leaders are planning to give ukraine that relate to become a candidate for membership of the [rock music playing] following intensive

campaign -- candidate for membership of the bloc. that you is also granting candidacy status to moldova. the formal decision will come at the e.u. summit in brussels starting thursday. the bank of korea says negative impact from rate hikes will be limited. for inflation remains a risk and must be tamed through preemptive policy. south korea's producer prices rose in may, jumping 9.7% from a year earlier. more economists say they'd be ok hiking by 50 basis points at next month's meeting. sri lanka's prime minister says the country's economy has completely collapsed, and the only path forward is an agreement with the i.m.f. he told parliament that sri lanka is unable to import fuel because of heavy debt. officials are speaking to the imf this week about support. plans are also underway for a summit with india, japan and china to help secure aid. officials in afghanistan say the

death toll could rise, after an earthquake destroyed thousands of homes. at least 1000 people were killed, with 1500 more injured. the magnitude 6.1 earthquake sets off a new humanitarian crisis in the country already facing a crumbling economy and hunger. the taliban supreme leader made a rare public appearance to plead with the international community for aid. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, china's growth policies are feeling to spur property demand. we look at how they are stoking fears later this hour. at first, look at the bank of japan's options as speculators ramp up chances for a tweak to its monetary policy with our next guest. this is bloomberg. ♪

>> ongoing rate increases will be appropriate to expeditious progress towards higher rates. we know we have restrictive

policy that is where we're at. the economy is strong and well positioned to handle tighter monetary policy. >> if interest rates go too high, too fast, it could drive us into recession? >> certainly a possibility. the other risk is that we will not be able to restore price stability and will allow high inflation to get entrenched. price stability is really the bedrock of the economy. we must restore price stability, and we will. the public should believe that we will get inflation down to 2% over time. we are strongly, strongly committed to restoring price stability. we do understand that it is the thing that we need so that we can get back to the kind of labor market that we all want. shery: fed chair jerome powell testifying before the senate banking committee. we continue to see the federal reserve tightening. the bank of japan pinning rates down is really what is driving the japanese yen already to the 24 year low against the u.s. dollar. we are seeing more strength for today's session at 130 six.

we saw it gained ground a bit against the u.s. dollar in the previous session. a bit of easing on dollar strength as well. the aussie-yen continues to gain ground, at the moment trading at the 94 level. we continue to watch the push and pull factor for monetary policy divergence. at the same time, the likes of goldman sachs and societe generale saying the yuan is undervalued, and that it could be a hedge against -- saying that the yen is undervalued and that he could be a hedge against recessionary risk. where do you see the level of the japanese yen going? we continue to see the rate divergence, but some people say that they are still bullish yen. guest: thank you for having me back on.

we think that pleiadian can still weaken -- we think that the yen can still weaken. 125 was an appropriate level where interest rates were. i don't see the japanese changing their policy soon. shery: a weaker japanese yen is supposed to help exporters. does that mean we'll get a boost to the equity space? ed: equities are a tough call. there will be some significant losers, there is no doubt. i think it is an sector by sector basis if you want to think about hospitality, interest rate, income flows. other areas -- top inflation will hit food, fuel, things that the japanese import. it is very problematic. japanese exports is fantastic.

it really sets up an analysis that you need to have. haidi: what is the feeling when it comes to inflation expectations in japan right now? obviously, the doj is sticking to its view that all of this in a sense is supply-driven and perhaps more transitory than the fed like to see in terms of the stick of inflation and wage inflation in particular. what is the fed mentality? ed: there are a couple of parts to answer that question. the first part, we have been waiting not years, but decades to see actual inflation come back in japan? we have been in a highly deflationary environment that has caused endless amounts of grief, political and social and economic levels. i think some in japan are happy to see this play out. if this is the way that we bring inflation, then so be it, in the medium-term and the short-term.

the goal of 2% inflation federally seems to be happening and it may well take hold. remember, it has been decades of economic downward cycles. in the medium and long term, of course, the big question of whether we go back to the 1970's sort of stagflation. we are not a believer in that. we think the situation is well-managed as it could be right now. probably they were late to raise rates at the fed level, but it now seems the world has chimed onto this being a significant issue. the japanese uniquely can afford to sit on one level and benefit from everyone else raising rates. they can afford to be slower. haidi: there is so much wholesale selling going on at the moment. your strategy currently, you say , do what your grandmother

always said. what did she say to do? ed: [laughs] buy quality on sale. japan is 25% cheaper than it was three months ago. the cash flows you are buying are phenomenal, there are businesses much cheaper today than they were three months ago. so quality on sale, this is a great time frankly for an international investor who is thinking in their international portfolio to be looking at japanese equities and real asset purchases, as well. shery: how much more competitive does it get to purchase japanese assets at a time when the yen is low and you have competitive edge when it comes to exports against, say, south korea or china? ed: it's a great question for almost three years now, we have been sitting in japan inside this bubble and no one has come, they couldn't afford to get into the country>> the japanese government was not letting people enter.

what you call the normal due diligence process, the normal review that you do before committing more capital has not been taking place. so how much further does this have to run? it's an interesting question. it could certainly get cheaper, there is no reason why we don't hit 140 in the next month or two if all the major players' interest rates policy stay the same. what does that mean? assets will get cheaper, but be aware, other people will be thinking the same thing now. so you need to figure out how to get into japan, and how you rate opportunities. haidi: there is a lot of talk about support for startups for tech innovation in japan at the moment. what reforms you think need to take place in order to really -- in order to reinvigorate corporate japan? ed: great question.

we think about it every day. a couple of important changes have been taking place. it would be a 70-80,000,000 dollar vehicle for making new investments and making a different type of investment on behalf of really the japanese government and the japanese people. the changes that have gone on in corporate japan to make japan more internationally competitive continue to happen. sometimes a little bit under the surface, sometimes not at all, sometimes publicly. the changes in the stock exchange, their promotion of good corporate governance, need for outside directives, running a business better, that has been an active dialogue and i think it is getting to a point where you can do a bit of corporate arbitrage to see which companies are better-run and which are adhering to frankly more favorable policies, if you will,

regarding esg, regarding corporate governance. and that will create an opportunity. there are very identifiable cash flows if you go to the corporate level. this is a place where murphy accounting works. you can do due diligence about the business and look at the managing of the business. shery: at rogers, good to have you back. rogers investment advisors ceo and cio, on the outlook for the japanese markets. we are counting down to the start of trade in tokyo. japan pmi is set to be released in an hour. toyota is also a new two boost july-september production by 40% from the same time last year, despite continued fallout from covid-related supply

disruptions. and the nikkei is reporting that toshiba is planning to develop motors for electric aircraft. in south korea we just got producer numbers rising 9.7% year on year. this is just accelerating inflation. we continue to watch with the bank of korea does. will we see an outsized interest rate hike next month? general motors says it's south korean unit plans to raise annual production capacity to 500,000 cars and introduce a gmc-branded pickup truck to the market. and the finance ministry will release its july bond issuance planet later today. we are a half hour from the opens in japan and south korea. this is bloomberg. ♪

haidi: we are getting a lot crossing the bloomberg. shenzen is occurring.

-- is requiring pcr tests for people entering the public as we see that covid outbreak shifting. the flare up in shenzhen, which is a key tech manufacturing hub. it is triggering a lockdown of some neighborhoods in shenzhen. we also saw macao, just about 1 hour drive away, racing. the first outbreak in eight months as well. dcaa subduing of the virus in beijing and shanghai, but it is -- we are seeing a subduing of the virus in beijing and shanghai, but it is moving into other areas. that's get you a quick check of the latest business flash headlines. tesla ceo elon mask says in new plants in germany and texas are losing millions of dollars as the automaker ramps up production. musk called the factories gigantic money furnaces in an interview recorded in may. it offers an insight into his recent decision to cut costs at tesla by laying off employees.

the overhaul at jack ma's ant group may be getting closer to satisfying china financial regulators. bloomberg has learned that the company is poised to apply for financial holding licenses as soon as possible. sources tell us the pboc will accept the company's application and start a review process looking into its capital strength and business plans. sources tell us that malaysians state-owned firm could raise more than $230 million in an ipo of its palm oil unit. the investment arm is set to be asking for pictures for the potential listing. we preview central-bank decisions coming out of asia,

>> i would even say with the

announcement, with the right announcements, to increase the interest rates and a steve way, in particular when i look at the steps. again, i support those steps, clearly. i think that it always needs a percentage. but at least i would say we are 50% likely to have a recession globally, but also in europe. >> you think about the financial system and the ability to apply credit to people. i don't expect that to happen this time. i would expect a mild recession, like 1990 or 13,000 to one, not the recession like 1973 or 1974 or the great financial crisis. haidi: bloomberg economic advisor and deutsche bank on the odds of a recession. let's get more on the fed policy direction. our chief asia correspondent

enda curran joins us now. how do you read this morning from jay powell? enda: i think it's an explicit acknowledgment from him, i think it's a first time he said that there is a chance, or at the very least it would be very hard to secure itself landing for the economy. that means there's a chance that it does fall into a recession. he did not say explicitly if it was a done deal. he also said during the trade-off, alternatively, that he would allow inflation to become entrenched and obviously, with all of that and at the same time, certainly noteworthy because the talking point at the moment was that it's inevitable that the u.s. will probably fall into a recession. there's a risk the global economy will call -- will fall into a recession. the fed chair, mr. powell, come -- came under a lot of question and he did seem to acknowledge

where people have been saying for a long time. when you're hiking rates at the pace you are, pulling off a soft landing would be a tough task. shery: you mention the global economy's potential to fall into a recession. how bad could it get? enda: there are two things at play at the moment. the u.s. economy is slowing down and at the same time you have china, the world number two economy being in the hole that it is due to covid zero restrictions. that was all there in previous downturns. china and asia might rivet up a bit. but there is a lot of concern about the global slowdown as i mentioned the group 50% chance of a recession. i think most importantly, this time around a lot of central-bank governments around the world are actually pretty spent in terms of what they have done to support their economies. even though they raise interest rates. interest rates were already low. the government has borrowed and spent a lot of money.

we are in the public board will come from for the next downturn. all indications is that the world is in a tricky spot at the moment in six months from now could be in a fairly precarious position. haidi: we also have the indonesia and philippines rate decision today. enda: indonesia, they are trying to balance a weakening currency, that would suggest higher interest rates. core inflation is in a major concern, so economist think they can hold off on raising rates. that's interesting given what the fed has been doing. philippines, bit of a different story. their inflation is at the highest since 2018. they are expected to have a final meeting before he goes out for the finance ministry purity is expected to raise rates. you would have to say neither central-bank is showing the type of panic that you might've thought would be likely do raise interest rates given the pace of the federal reserve raising interest rates. haidi: which is why we see -- shery: which is why we see the

downside pressure on the currencies period in, bloomberg's chief economic correspondent with an outlook on monetary policy in the global economy. when it comes to those inflation fears, rising prices, a lot to do with that surge in commodity prices that we have seen recently. but at least for today, it seems that oil futures are taking a pause. in new york they fell to the lowest in more than a month. a pullback continues in the asia trading session. we are seeing copper and iron or extending severe declines. su keenan joins us now. not really that surprising considering we are afraid we might fall into a recession i we will see the demand disruption. su: demand is the key concern. that's why we had west texas intermediate down 4% in the latest session in brent crude down as much as 6%. oil really has been under pressure. this is the second time we have seen oil fall sharply in less

than a week. we are seeing fewer major investors. you have to remember the price of trading got expensive after russia's invasion of ukraine because liquidity crisis. and in the wednesday u.s. session. we did have fed chair jay powell testifying before congress, doing little to dampen fears of a recession. so prices of oil were down. gold held gains in the u.s. session, although it's giving back some of the gains at this hour. notably copper tumbled to its lowest since march, 2021. and these are again, concerns about demands. also china adding to this, the rolling china lockdowns. slowing demand over there, as well as the slowing global housing markets have really weakened sentiments investors and analysts say. drop into the bloomberg one more time and you will see a pattern with oil that the spikes we have seen in oil, and you have to

remember it was two weeks ago oil was at 120. these spikes often proceed recession. you've got citigroup's ed morse saying that you can expect oil to go lower from here and to be a lot more choppy from here. the path ahead will be bumpy, he says. haidi: iron ore extending that route. su: china's progrowth policies have done little to tamp down the concerns that the market is much more fearful now that it was before. that there is going to be -- amid the slowing demand. futures have lost a quarter of their value over the last two weeks. and this is as the chinese economy struggles to emerge from the lockdown. we demand is impacting a lot of the steel companies in these 18 blast furnaces have been idle. the company put them in maintenance and that's triple the rate we saw just from six days ago.

the outpour falling by the most, more than 54,000 times a day. analysts say prices have much further to fall, and there is somewhat of a sense of urgency because china has seen improvement on the front. the number of cases has really fallen in the last few weeks. however this is a concern that shaders are now really focused on, the demand that leaves us. haidi: bloomberg su keenan. we are less than 30 minutes away from the markets open in japan, korea and asia. we will look at the outlooks of aussie stocks. annabelle: we lost around 16% of the asx 200 of this year. what's interesting in this market is we have seen earnings revisions upwards over the past six months. it seems like over control and commodity inflation is really boosting underlying expectations

for company earnings. but when bloomberg intelligence has been going into why we drop in our corresponding with the earnings estimates, what we're finding is that the markets have become more dependent on the direction of the underlying fundamental. we take a look at the chart, this is a weekly consensus p/e ratio. we are seeing a trading at 12.4 times earnings. you compare that, it is below the drop of covid and up around 40% from november of that year. you compare that to what we see for the aussie bond yield. we are around that 4% level up from four point 7% on october 2020. that is positive or earnings of around 25% over the past six months. and you take a look at which sectors have really been in a fitting from that, as you would expect the energy and utilities that a fitting from rising commodities expectations. these rate sensitive sectors for discretionary, real estate,

technology. these drops across the sectors, we are not seeing it reflected in the eps revision. what is really contribute in most to declines is actually the aussie banks. again, interesting here because aussie banks can really benefit in a rising rate with higher net interest margins. we have commonwealth banks up around nearly 12% year to date. has made up around 10% of the total wealth on the asx 200 across the whole sector. haidi: let's get you to vonnie quinn now in new york with the first word headlines. vonnie: thank you. chinese president xi jinping is criticizing sanctions for stoking global economic pain. in a speech in beijing he did not explicitly mention the u.s. but says some nations are politicizing in weaponizing the world economy. he also cautioned against confrontation and suggested that nato was responsible for antagonizing russia.

u.s. trade representative says tariffs on more than $300 billion in chinese imports provide significant leverage and useful in negotiations. she made the comment as by their ministration officials debate on whether to keep it in place. they also said there's a limit to what could be done to ease inflation through tariff changes. >> the china tariffs are, in my view, a significant piece of leverage. in a trade negotiator never walks away from leverage. we need to use our tools more effectively, we need more tools, we need to bring in a new approach. vonnie: china has approved a plan to promote what it calls healthy development in fintech sectors are at a meeting chaired by president xi jinping backed and helping regulation with major payment platforms. they will unwind on tech companies that ensnared every sector from online education to gaming.

global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. shery: coming up, we hear from qatar's minister of finance about how the war in ukraine and surge in energy prices are affecting the economy. that exclusive conversation from the qatar economic forum is next. this is bloomberg. ♪

>> it's going to be a little lower, but we don't know what's going to happen. we have a position. this year we have about 70%. next year we will only have 25%. the most important thing is your company people. you have people that don't have any hedging. i think if at the end, we arrive to a situation with high fuel price, we will transfer the cost of the price. haidi: that's iag's ceo speaking at the economic forum talking about how airlines are handling fuel price. we are tracking the fallout of the supply chain trench and these are the top issues. boeing is persisting until the end of next year. the ceo says suppliers have been

affected by staffing shortages and is adding pressure to an industry facing to keep pace and travel demand. meanwhile, shipping costs are fueled by gasoline and diesel have soared in the wake of russia's invasion of ukraine. data shows that a clean tank had more than doubled this year. ship owners for one key route and asia are now earning over $49,000 a day to transport energy products. that compares to $98 a day prior for the war. london's luxury department store has delayed its summer sale as they were caught up in the global supply chain snag. they told bloomberg there supply chain is running two to three weeks behind schedule. shery: take a look at the commodity space. all that talk of potential recession that has been felt across the commodity space. oil prices, even in the asian

session, we continue to go lower already for that one month low. copper falling to the 15 month low on potential concerns that we might see a recession here in the u.s., also where the chinese economy is headed. iron ore has fallen significantly earlier this week. more chinese furnaces idle. we saw a little bit of a rebound there up 3%. gold unchanged at the moment, but this after gaining a little bit of ground in the new york session on that haven demand. bloomberg terminal users can read more about it. that's on and i trade nl. despite oil and gas prices, qatar says it sticking to its fiscal policy plan. the finance minister told us exclusively that the gulf state is not isolated from inflationary pressures and is looking to diversify the sources of income. >> oil prices is good for any finance minister and, for us, we

do look at it this way. we look at it like we have a very turbulent medium plan for the country. this is based in the long-term planning and spending, and we are very disciplined about our spending and fiscal reforms. we are not changing our plans as a result of the high oil prices and we should not forget two years ago we almost had negative oil prices, so it's not far away. we should always remember this. we are sticking to our plans, sticking to our fiscal policies, and we look at it like this is something we need to use in our surplus to enhance our reserves and our investments. >> are you changing where the money goes in terms of the government? is mere -- is more going to qia orange infrastructure, social policy? >> as i said, we have a fixed fiscal policy. it has certain formula that decides how much goes to pay

debt. how much the hang seng the reserves of the come -- qatar financial bank at how much goes to qia. the tax reforms as part of our plans. we are looking to that taxation policies here and what we can do, and diversification in our plan. of course, this also falls in line with what i was saying earlier about the fiscal policy framework. and we will look to the right target to apply such taxes. we have to be very careful. don't forget there is inflationary pressure going on in the world and qatar is not isolated from the inflationary pressure. so we will have to selected. when we apply attacks and in the inflation cycle. -- >> what you are saying is is not the right time? >> i would have to assess the right time. >> there has been a lot of hospitality and there is in a massive population here, 2.8 million people. is there anyway you can avoid a

real estate slump? >> business goes up and down. what's going to happen is we have to look to the qatar national plans. they have a diversification plan and we should move away. for the last 10 years there is so much in the infrastructure in the construction sector and they drive economic growth. the way we see it is for the next 10 years. we see the priority sector for the economy and moving in in the financial sector in our innovation, technology, food hub, logistics. qatar has a great position. we will see a huge shift in the economy. simone: that would bring in more people? ultimately that's the hope. i want to shift years. last question. you have invested money or talked about investing money in egypt as it goes through their

own inflation crisis -- prices, high energy prices, high food prices. does qatar in the gulf generally have a responsibility to put money into the economies in order to prevent them from collapsing, essentially, under the stress of the economic situation now? >> qatar has been a major investor in egypt, and as we go for many years, we enjoyed excellent relationship with egypt. these things come and go. but always better for the long-term. in the way we look at it, we look to the future. the future is promising. egypt is a great economy. it is a growing economy. it has many opportunities. when we promised to invest in egypt, because we believe in the economies, so we will continue to do this investment. haidi: qatar is finance ministers speaking with simone foxman at the qatar economic

forum. be sure to boot -- tune into bloomberg radio to hear more from the big newsmakers. you can get in-depth analysis from the bloomberg rate -- daybreak team there. you can listen via the app, radio plus or bloombergradio.com. lots more ahead, this is bloomberg. ♪

shery: here's a quick check of the latest business headlines. j.p. morgan chase is letting off hundreds of home lending re-employees and reassigning hundreds more. bloomberg learned that the total affected will be more than 1000 workers rapidly rising mortgage rates have driven down demands and what have been a red hot housing market. goldman sachs is expanding further beyond its base in new york. the firm plans to station 5000 employees in a new office tower in dallas. goldman and the developer investing roughly $500 million in the project. the bank already has almost 4000 employees in north texas. they have finally gained permission to open its flagship casino. the news comes days before flagstone takes over. the regulators have allowed them to conditionally begin supervised operations. the casino's office opening has been on hold since late 2020.

at $6.2 billion takeover bid for crown in february. haidi: toshiba, one to watch when it comes to the tokyo session. number of reporting the company received a proposal to take a private from government japan's investment core. we are looking at asian energy names. pushing oil to its lowest in over a month. at the pace in australia, still watching japan petroleum sk innovation as well. also looking very keenly as to when it comes to the bond markets. australian bonds jumping earlier to follow from rallies from global peers over fears of u.s. recession sending investors back into the depths of government debt. the 10-year dropped to 3.84 and we are seeing their play out across other parts of the curve as well. the three year tumbling 12 basis

points, that 10 year yield with that 15 basis point side set for a full day decline now. and this is what we are seeing really outpacing wednesday, u.s. yields for a haven security. really seeing the highest yields that we have seen in years. in all of this is really kind of encouraging that relevance of sovereign bonds back into the balance portfolio. shery: 10-year yields rising to that. falling to 315. you talked about those haven assets. take a look at that because we are seeing that risk off sentiment spreading across asia. nikkei futures down 6/10 of 1%. this would make it a second session of losses and we open and close to the downside. we are seeing u.s. futures also extending declines. we have seen it in the new york session reversing earlier gains, especially after chair powell testified in the senate, really reiterating their commitment to curb inflation.

does that mean? perhaps faster rate hikes. the risk of recession. the soft landing will be challenging. all of that really being felt across markets right now. they are rebounding from yesterday's office up by 5%. we continue to watch words happening with the rv fed rise there. wealth management gives us his strategies amid rising rates and warnings of recession. plus, she will share her insights on china's credit market and possible contagion risks. the market opens in sydney, seoul and tokyo are next. this is bloomberg. ♪

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shery: this is "daybreak asia", counting down to asia's major market opens in the reaction of fed chair powell's acknowledgments of the risk of a potential recession. this as we see the safe haven demands play out. global yields are falling at a time when we have a couple of great decisions across asia as well. >> really kind of solidifies concerns that the soft landing will be a tricky one. not just jay powell, but most of these global central banks are on the same path. let's get you straight to the market open. >> recession risks are the order of the day and asia. just a few seconds away from the open in japan, south korea and australia. we will watch the open of treasuries because we have cash market starting for a few minutes. a few seconds from now we have seen the move towards haven assets and we will see it reflected in trading with the open of the yields. that's also playing out against other haven assets.

you are keeping a close watch on the yen. strengthening against the greenback. at its strongest or highest point over the past three sessions. nikkei meanwhile coming online, fairly flat this morning. that has been reflected or unchanged at the moment. the point is that japanese stocks are likely to reflect these recession risks and we will be watching the energy and machinery sectors. let's check in on how the market has opened in korea. we either because that just inching a little bit higher at the start of trade. but it did drop around 3% in the previous session and still is below their key 2400 level. looking at how we see the tech heavy index year. it is mostly aligned with what we are seeing for the kospi. it was the biggest drag in the previous session. institutional investors in korea are part of that selling pressure we are seeing from the foreign players. the wand is pretty flat, but we are at a 13 year low against

their greenback. turning to the open we had in australia, as well for the asx 200. coming online. it is a staggered stop -- star and it will take a few minutes to get started. we will track the energy sector very closely with what happens in oil prices and other key materials. brent crude coming online to the downside. further losses, that does weigh heavily on the biggest commodity giants in australia. the aussie dollar, little changes against the greenback. >> let's get analysis with our chief asia economic respondent enda curran. how serious do you take this morning from powell when you compile data against everything else we've heard from the fed chair so far? enda: i think it significant that he has admitted that pulling off the soft landing will be difficult. the recession is an inevitable, but the fact that the fed chair even has to answer questions

about that shows you how far we have come. at the same time, even when he warned about the risk of not pulling off a soft landing. he made it clear that trade-off would be allowing inflation and inflation expectations to become invented. -- embedded. that would create longer-term damage. interest rates would have to go up further from here. it is a question of the trade-off. despite his, on the recession risk. i think the big takeaway remains they are jacking up rates and don't plan to slow down anytime soon. shery: we continue to see the policy with an aggressive fed or potential signals of a very aggressive fed against perhaps some of the asian central banks not moving as fast. we have a couple of decisions today. enda: that's right. if the fed is going up the pace that the rest of asia would be watching those rate increases. it's not playing out like that. we think the philippines are

expected to raise rates and inflation to pass since 2018. you would want to see the last meeting before it goes to the finance ministry, so the rate hike is priced in there. indonesia is slightly different. they are thinking there is a core inflation still under control. the growth story still leads in support. on the other, you just have to keep an ion the cheaper currency, and he wouldn't want higher interest rates to keep on the currency. some are saying maybe the price hike is likely, but a majority are saying on hold. and you are right, it's playing out in asia. let's not forget china and japan are headed in the opposite direction of where the fed is going. shery: our next guest said building up defensive strategy as he sees bond yields rising in growth slowing. that's bring in the head of a peck equities in credit and ubs wealth management. always good having you with us. so, tell us a little about the repercussions to the asian market. if we do see a u.s. recession,

and what part of the market are defensive enough for you to feel secure? >> and apac, at this point, the station between china and almost all of non-china. starting with non-china. not to some extent. just the slowdown we are beginning to see in the u.s. for the most part. also going to see them here. so in that sense there is some of this. for many of the central banks also assume that they are not trying to stay too far behind the fed because also, especially with current accounts, you will have the currency to run you off. china on the other hand is different. if we come from a market point of view, the u.s. just passed at peak. inflation issue on consumer inflation. in tight men in china is over

the last couple of quarters and has already traveled down to what we think is 1% or 2% on growth in their quarters as we speak and consumer inflation is not that much of an issue. so it is not surprising to see that the chinese market is about the only one, if you look at the -- at the last two or three months, that is going up. shery: it has been pretty resilient. beijing is also hosting the virtual break summit. i love your call where you faced position from the era of security. tell us how you factor in china and it's whining about sanctions and economic global payments as well. >> our observation is many countries we think the strategies get their energy from and potentially where they get their food from. in many countries, it doesn't

really matter, even before, they started to think about their military spending, if it is sufficient or not. these are areas where we see shifts and we see things moving. and also the sense of this. this is also something one can explain. haidi: in terms of how much you are hedging for inflation, what sort of opportunities do see given -- i guess the unusual concept of the inflation risk? are you looking for inflation hedges? >> to an extent that, and also in conjunction with that whatever, the customer program, the economic slowdown that comes with the inflation. we need to look at both and we apply a toolbox and we will

really hit recession and it's almost a bit academic because the way you need to infest is somewhat similar. so starting with equities, like we have, if you are overweight on the health care sector, which is not that sensitive on the economy, also in terms of input costs. for energy and food. hedge funds are certainly one of the parts in the tour book that 10 to try a have a better opportunity than an area like this. last but not least, also bonds, the last couple of years, especially the safer ones it's really not on anybody's radar. the investment grade bonds are difficult to find. a combination of those. haidi: you are also quite constructive when it comes to australia. >> i think commodity related to other countries in currencies in this case is also something we

certainly -- especially when you think about inflation, it's an angle that has to be considered investment and especially with the relationship with the supplies towards china. which as we know you can argue about the pace, but is starting to reopen from covid, even if it is in some cases, a bit cautious. when china is on top of it, it is an angle. >> let's get you to vonnie quinn with the first word headlines. funny: negative impacts on growth from rate hikes will be limited. the senior deputy governor -- governor said as long as inflation remains a risk, it must maintain. south korea's prices rose at a quicker pace, jumping 9.7% from the year earlier. more economists r.o.k. by hiking 50 basis points at next month's meeting. european union leaders are

planning to give ukraine the green light to become a candidate for membership of the block. it follows an intensive campaign by volodymyr zelenskyy. a draft statement seen by bloomberg said the eu's granting candidacy status to moldova. the decision will come at the eu summit in brussels starting thursday. sri lanka's prime minister has said the country's economy completely collapsed in the early path forward is in agreement with the imf. sri lanka is now unable to enforce fuels because of heavy debt. they are speaking to the this week. and also underway for india, china and japan to secure a. officials in afghanistan say the death toll could rise after an earthquake destroyed thousands of home. at least 1000 people were killed with 1500 more injured. the magnitude 6.1 quake set new humanitarian crisis in a company already facing hunger. the supreme leader made a rare public appearance for the

international community, pleading for a. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. shery: let's now turn to -- choose swallowing one stock in japan very closely. >> that's right -- annabelle: that's right, this is toshiba. this is on a reuters report. the bid is here considering upping the price per share, offering to take the company private to ¥7,000. they've got a report out on this, even though reports are in the preliminary stage. they are saying no real need right now for the stock to reach said ¥7,000 level. the reason for that is there still quite a long way to go and that the price could easily be lowered and the second round. analysts has written about this saying there are conditions here to work through in some assets could be needed to be spun out in the terms of this deal.

and because of that, the deal price could be lowered in a second round of bidding. today we are seeing it trading up around 6%. haidi: with oil falling, we are watching energy stumps in the downside. annabelle: we are also keeping an eye on the machinery stocks. we did see caterpillar off around 5% in the previous session as well. but we are just keep an eye that leads to some of the energy names as well. we did have that drop. we will check in on the machinery stocks, so we did have that drop in caterpillar and we are seeing some declines across modes -- across most of the regency here today. >> the recession fielders are being filled everywhere. why china's covid zero policy will keep investors on the sidelines of the country's credit markets. we are joined later this hour.

the first, china's president blast sanctions for stoking global economic pain. but stop short of blaming the u.s.. we will look closer at the message being sent. this is bloomberg. ♪

>> i think this is what's coming

in. >> it could be so amazing if we just haidi: chinese president xi jinping is stoking global pain in his speech but began this

year in the summit. >> politicizing, amateur mental lysing and weaponizing the world economy using a dominant position in the world financial system to wanting the impose sanctions would only hurt others as well as hurting oneself. leaving people around the world suffering. haidi: she is also looking to bolster relations with emerging markets restrained to western ties. our china senior executive editor john, this is pretty fascinating when you consider the cohort that the messages at her being sent to. what is he trying to say with the latest,? john: sanctions, especially american sanctions in which the united states uses its dominant positions to levy sanctions against other countries, that's an old bugbear for beijing. obviously china, when it comes to hong kong, has been the target of sanctions like this, and president xi is looking for

sympathetic years. these more likely to find that in the developing world among the brit countries, russia, obviously stands in line with china on sanctions. even india, which is growing closely to the u.s., has been hesitant of supporting american sanctions against russia. he wanted to continue buying oil and arms for russia, so you see the divide in the developing world and china's china take advantage. shery: when it comes to setting up the alternative to the global governance order that we are seeing with china, and perhaps the push by russia as well. how much of a divergence in there within rakes, especially with the likes of india, as you mentioned? >> i think there's a general consensus among the countries that the developing world should have a greater voice when it comes to global governance. i think when you look at the imf, the world bank, these are all the outcomes of post world war -- post-world war ii

dominated by the united states. as china, india and other countries begin to develop economically and have gotten stronger militarily, economically, they wanted a bigger voice. that was essentially wide the bricks cohort formed about a decade ago. haidi: when it comes to the issue of tariffs, we know that president biden is a likely to have this conversation at some point. is there an idea that this is seen as pretty crucial leveraged by washington? >> i think if there is something that could be done with the tariffs, that's good for the u.s. and china for both president biden and president xi . that's likely to happen. lowering the tariffs would help the u.s. when it comes to inflation. as we heard from the u.s. trade rep, those are a form of leverage when it comes to discussing trade and other issues with china. so i think washington will be

not wanting to take too many off the table too quickly, but for beijing, i think any lowering of tariffs will be welcome, given the weakness of the economy that i think xi jinping will be looking for to shore up growth going into the second half. shery: when it comes to those tariffs, given the political agenda in both countries, how likely is it that we will see any movement? we have midterms in the u.s. and the party congress in china. john: it's a difficult calculation for washington because no one wants to be seen as weak on china. but at the same time i think the loaders are paying more at the supermarket and more at the pump for gas and groceries. trying to do something a help them with that would be very welcome. so it's a rock and a hard place unfortunately for president biden. >> as bloomberg's greater china senior executive editor.

this take a look at the asian markets right now. of course we had sort of a negative lead when it came to wall street. of course we had those u.s. stocks reversing earlier gains. right now we are seeing a little bit more positive sentiment across the board with the nikkei reversing the losses we saw in the previous session and the kospi is unchanged. you have to look at the korean won. we are talking about weakness at around of 1300 level against the u.s. dollar. i can't remember the last time i saw that weakness. i believe it's a decade lower against the u.s. dollar, or more. we continue to watch that as the japanese yen is holding 136 level. we of course have seen that 24 year low against the u.s. dollar. asx is up. we are watching yields in australia and the rest of asia because global yields are under pressure given the haven demand. we have seen treasuries rally,

the 10 year yield hovering around the 315 level given the concerns about recession. haidi: let's check in on how futures and europe are opening up this morning in stoxx 50 futures are down's extensive a percent. the tune of the same when it comes to the msci europe index. down by half a percent. we did see stocks in the previous session paring earlier declines after we heard from fed chair jay powell saying they would raise rates to runaway inflation. but we are seeing their concern that with inflation pressures looming with fears, that the pressure margins for european stocks would herald another downturn. both in estimates at in prices. we saw european stocks napping the three-day rebound on the concerns about the broader global recession there. so in particular, watching a minor in energy names given they were the big losers and continued to extend declines given the fallen oil prices with

the lowest in more than a month. shery: boeing's coc supply chain pains for the sector. lasting until the end of next year. our exclusive conversation with david calhoun is next. this is bloomberg. ♪

shery: boeings co is warning the supply chain constraints in the aviation sector could persistent and next year. that's as the interests rate is rising for surgeon demand. spoke to bloomberg about whether the post-pandemic travel boom is sustainable. quakes increase in demand and it what's articulated by pretty much every customer we have around the world, suggest that when a flight gets canceled or supply is reduced, the bookings

just move out another month. in other words, the demand remains, and it's really supply trying to keep up with demand. >> at saarc about supply. it is been a major issue not only for your customers but for you. when is the supply chain shortage of labor bit, you name it, when do you think it will be fixed? >> it's not clear to me when it gets fixed, but what we have to attend to suggest it doesn't get fixed until probably the end of next year. in the real issue, we have a very large sophisticated and somewhat flagyl supply chain behind the airplane manufacturers. and just as fragile, it turns out, are the operators themselves, the airlines, and the ability to staff up with pilots. the ability to staff with ground crews, maintenance crews, etc.. hardly a week goes by where you don't see them not being able to keep up with supply side. i believe it's going to last for

a while. >> the fed chair will be joining the conference later. the emphasis of the moment is on the fed president putting emphasis on the fed to deal with this inflation we are seeing right now. the supply-side problem and bottlenecks. do you think we need a recession to fix some of this? >> i won't use the word recession, i'm not sophisticated enough to do that. on the other hand, slowing things down a little bit would be helpful to a lot. it doesn't help every industry equally. but in our case, where you compete with other industries on certain disciplines, software development, data analytics, etc.. in those instances, if we see a softening of demand, it will be able to watch with retention of our people and recruitment of new people that deal with growth. >> you've had huge operational challenges. the max program has been one of them. seven program. we still don't know what 777x is

going to go and when that will be certified. do you feel you've got a handle on what's happening on the timeline you've got to fix these problems? >> i feel like we have a grip on it because we have been very deliberate about the fixes and our attention to detail and documentation with the, our counterparty. we made steady progress every step of the way. most importantly we've been transparent with everybody every step of the way. our customers, the faa, regulators around the world. while that's uncomfortable, that was always necessary to regain trust. haidi: boeings ceo speaking with guy johnson at the qatar economic forum. a quick check of the business headlines. tesla ceo elon musk said germany and -- are losing billions of dollars as a ramp up production.

it was in a video interview recorded at the end of may. they offer new insights into his recent decision to cut costs of tesla by laying off employees. the overhaul of the group may be getting closer to china's financial regulators. bloomberg will apply for a financial holding company as soon as this month. global sellers intend to accept the application and have a review process looking into the capital strengthen business plans. shery: investors are reluctant to put any capital into china credit until there's a clear recovery. we will discuss. this is bloomberg. ♪ psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill, over t-mobile, at&t and verizon.

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shery: getting pmi numbers out of japan for the services june preliminary numbers coming in at 54.2, which is a big improvement from the previous month and the third consecutive month of expansionary territory. the composite number at 63.2. manufacturing surprisingly easing from the previous month coming in at 52.7. perhaps some forex dynamics could be at play. of course we are seeing japan coming out of the pandemic. in that manufacturing number is a little bit softer than expected. but bell is of course following everything in currencies in the japanese yen and is also off to the 24 year low for the u.s. dollar. annabelle: we are seeing the yen decline in. holding saying we could see a perspective that 137 level if we see yields rebounding and also oil prices as well. but of course we see them dropping this morning and that is the order of the day. this risk of aggressive fed hikes year and yo are you yields in play. we just saw the korean won

opening at the top of the hour below that 1300 level for the first time since 2009. that bond selling we are seeing in the kospi, another factor playing into it because there is downward pressure on the local currency. no currency in this region is certainly immune to the feds hiking path year. so even hong kong's currency has been that effective central-bank who has been forced to sell its local currency. look at this chart here. we can also see other currencies that have been particularly hit by being seen as being slow to tame inflation. we have the indian rupee at its lowest on record. we also have the philippine peso at its weakest since 2005. haidi: the former new york fed president said the u.s. economy is headed to a hard landing as they are taming inflation. he told bloomberg he expects the recession to be mild and this

time within the next 12 to 18 months. >> but very much focused on inflation as opposed to employment, because the labor market is to tie as opposed to not tight enough. so i think we will reiterate the message that we've heard in the press conference the last week. i think also he will not talk about a hard landing. the federal going for a soft landing of the problem is we will have to fill this off. >> a lot of people are trying to draw distinction between a softer session or a shallow one and one that is much more damaging. what is the characteristic of the hard landing you envision? >> i think it will be a relatively mild recession at this point, because the financial system looks like it's pretty solid. household down sheets are pretty solid. we get it deep downturn when things in the financial system break. we really justify credit to people. i don't expect that to happen this time, i respect the session

like 1990 or 2001. not the session like 1973 or 1974 the financial crisis. >> a lot of people said this fed has no appetite and causing a recession. they don't seem to want to do that, and that they will permit away from raising rates as much as people currently expect. why do you think they will take a page from -- >> i don't think they want to recession. but you need more slack in the economy. and it's very hard to get slack in the economy without actually generating a recession. so they are definitely going for a soft landing and it will be almost impossible to pull off. >> is the assumption you are making that they will not blink, even when the data turns more dramatically than we've seen happen. larry summers was talking about a 5% on employment rate over the next five years. where do you think their tolerances? >> i think what larry is talking

about is reasonable. they know that if they blink and don't get inflation down, then they have to do more later. postponing is not a great option. the federal reserve or so to tackle inflation. inflation got out of hand and he had to come in and put the u.s. economy through the ringer. it is necessary in the near term so they don't have to do a lot more in the longer term. >> what it is in the longer term that you see the full effect of monetary policy taking shape. we all understand that. so i guess the question is if it's aggressive, are they going to see it reflected in the actual data we are getting, which is a risk moving way too aggressively and then the data turns all at once? >> that's what could happen, the economy has forward momentum. the household balance sheets are still strong, boosted by the

fiscal stimulus over the last couple of years. but things are troubled. >> a senior advisor for bloomberg economics and former new york fed president speaking with bloomberg. let's get to vonnie quinn with the first word headlines. vonnie: chinese president xi jinping is criticizing shanks -- sanctions for pain. president xi did not expensively mention the u.s., but said nations are weaponizing the world economy and causing suffering. he had caution against confrontation and said nato is responsible for antagonizing russia. u.s. trade representative katherine tai says tariffs on more than $300 billion in chinese imports provide significant leverage on are useful in negotiations. they debate whether to keep the duties and place. they said there's a limit for what leads inflation and tariff

changes. >> the china tariffs are a significant piece of leverage and a trade negotiator never walks away from leverage. we need to use our tools more effectively, we need more tools, we need to bring in an entirely new approach. vonnie: a meeting chaired by president xi jinping also backed for major payment platforms. beijing promise to unwind its crackdown on tech companies that ensnared every sector from online education to gaining. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: the chinese conglomerate forcing dollar bond snuffing decline after a week of heavy selling fueled concerns about contagion and china. our next guest says we are still in a time of uncertainty when it comes to china credit. we are joined now by teresa.

how concerned should investors be about the pace of the selloff? >> i think investors have always been aware that it's one of the key conglomerates that has many different business lines. many of which you may have cash flow, but many of which may not be. i think this level will hamper their ability to actually get out of this current quandary. but having said that, i think they could take an active approach and adjusted liquidity and talk about their sources and use of cash over the next several quarters. overall it's on the real estate claim. a large conglomerate with some

realistic could actually be heard at this point. i do think large conglomerates even though they may not be pure , will get scrutiny going forward. but having said that, i don't think that this is going to be a massive spillover to the rest of china's high yield for example. >> telus a little bit about the company's liquidity and ability to cover it steps >> the company actually came out overnight and explained that they are going to be able to fully repay the 202223. a couple of days ago they were doing a partial repayment and that really shook investors. at this point they do have sufficient liquidity, so if you look at the cash versus their short-term viability, it is

rather tight in the market is not pricing in a dave -- a default although the probability is there. shery: can there be real recovery in china credit with the covid lockdown still ongoing? >> that's the $10,000 question. i think it's really going to be hard for investors to come in with new money. so investors are standing on the sideline just waiting for china to pick on a new cobra policy. i think the issue is not a question of if, but just when and where these rolling lockdowns will continue to take place. as a result, it tends to mute any monetary policy, any fiscal policy, but they are implementing to loosen up credit and growth. so i think investors will continue to be somewhat weary. however, i think we are beginning to hopefully see the light at the end of the tunnel. because as we get closer to this

level of lack of access and liquidities in markets, the chinese markets who have to examine their current policies. haidi: when it comes to other sectors, there are more signals that perhaps the regulatory overhaul when it comes to internet and tech platforms may come to an end. are you feeling optimistic about that? >> i think that the chinese policymakers took a very strict stance last year when they felt that they have the policy room to implement many of these policies that they articulate. things like consumer protection and monopoly laws, but this year they have taken on more of a tone of, we may have overstepped and been overconfident, but in the gaming sector we start the

licensing. but it's not clear what will happen. we are hopeful that they will continue on a proactive and pragmatic stance that will hopefully bring back positive sentiment amongst both consumers and companies. shery: how exposes china to an economic slowdown or recession in the u.s. and globally? >> the dirty little secret is that the current surplus in china versus the united states is different than before the tariffs china is exposed to u.s. consumption. in many ways, china is marching to the beat of its own drum. there will be more sensitive because they have secured a lot

of the commodities, and they also have much more of a conducive relationship with russia. so, i think china is exposed to the united states, no doubt, but much more insulated than some of the other countries. >> the portfolio manager, always a pleasure to have you with us. thank you. coming up next, we will talk more about those slowdown fears and here in the u.s. and in china, because that's really rattling commodities trading. a closer look into the market fallout. this is bloomberg. ♪

annabelle: let's take a look at stocks we are watching. energy and focus after the biggest drop in oil, taking into the lowest in over a month. they are up by over 2.5%. watching woodside energy. over in japan we are seeing not much movement it comes to japan's petroleum, but oil is down by 2.4%. brent is holding onto the losses, down by close to 2%. under $110 a barrel. shery: for more on the commodities market let's turn to

su keenan whose following what's happening with oil. there seems to be a lot with what's happening with those recession fears. su: the idea of a global slowdown, which would impact demand for commodities is unnerving investors and we saw that with oil in the u.s. wednesday session. it was down as much as 4%. brent was down 6% at the lowest, and the slide shows the pressures that you are seeing on energy prices. we are seeing fewer major investors trading oil. the prices got expensive after russia's invasion of ukraine. that caused a liquidity crisis. let's see how they are treated in asia. an extension of oil decline. go held gains in the u.s. session. it's giving back those gains at this hour. copper, notably, tumbled to the lowest since march 2021. fed chair jay powell speaking

during the wednesday trading, and he did little to dampen recession fears, so that was reflected in the price. those rolling chinese lockdowns and slowing demands in the housing markets has also weakened sentiments for copper, analysts say. you are looking at the bloomberg that's very interesting about how oil spikes have proceeded recessions. west texas intermediate was above 120. he was out with his latest forecast saying oil is likely to fall further if we look at a big picture of oil in the last year. but the path ahead, he says, will be bumpy. translation, you can expect a lot more volatility going forward. shery: -- haidi: extending that route with furnaces idling in china. su: that is adding to concern about a slowdown in we've had china's progrowth policies failing to offset the growing

fear that could possibly be a glut of steel. the build up is now overtaking the previous concerns of supply shortages. futures in singapore for iron ore have lost a quarter of the value over the last two weeks. this as the chinese economy is struggling to emerge from the covid related lockdowns. distill producers, as mentioned, have been shutting down these furnaces. they shut down eight blast furnaces. that's tripled the rate from six days ago. a lot of companies just putting them into maintenance. we should point out that molten iron output is falling by more than 54,000 tons a day. analysts say that's a big number. what it means is prices have room to fall even further, so get ready for that. meanwhile, there's a bit more because there has been improvement in the covid reduction efforts in china. but this is the lagging indicator, the concern about a slowdown is a primary fear for a

lot of commodity traders at this point. shery: su keenan with the latest on commodities and how they are oiled by that recession fears. another sector that is very much really dependent on where the global economy goes. and they could get hit by recession fears. we will have more results about where they stand with the stress tests out on thursday here in the u.s., examining a hypothetical crisis estimating the losses that they might face based on their books of business. after that, we are going to see them coming out with capital plans in the coming weeks. the expectation so far is that jp morgan will be leading the group with more than $18 billion in combined dividends and share buybacks. haidi: this is the biggest lender builds off the offering to fend off competition. competition is fierce within u.s. banking.

because of covid, buying back for 2020, that really inflated last year's capital. the rna time of increased economic uncertainty. at the same time a lot of analysts say it's good when it comes to loan growth opportunities happening at the same time as well. so we will all have to see what comes out of these annual exams. it will look at the potential losses they might face on their books. shery: let's turn to china, because we are seeing the latest cases from shenzhen at the latest reporting three local covid cases for june 22 in this coming after we learned earlier today that shenzhen is requiring a pcr tests for people entering public venues. this also coming at a time where shanghai is now reporting nine

local covid cases. beijing reporting three covid cases. reporting five local covid cases as well. all of this as we continue to see those infections across china, in different parts of the country. haidi: coming up next, the group is applying for a key financial license as soon as this month. it could put listing plans back and play. we will discuss all of that next ahead of the china market open. this is bloomberg. ♪

annabelle: hong kong's incoming leader is working on a strategy to reopen hong kong's borders with china and the rest of the world. we are joined by our asian managing editor. this would be great news for the hong kong economy. for the hong kong people, but implications to the market specifically. >> my take-home is this is good for the overall reopening stocks. cathay pacific, the likes of all those watch retailers, they are starving for a memorial mainland tourist centaurs from everywhere. that's one thing. the other thing i can think of is, if bankers can start traveling, going in and out of

china into hong kong without any quarantining, that could really facilitate deal floats. you know the first half of hong kong ipo is really small. we are talking about $2.4 billion. that's like 1/10 of the volume that hong kong ipo rates just raised in the first half last year. i think a lot of it is just virtual meetings are not the same. when you try to get deals. i've heard stories of bankers going into shanghai and being quarantined for 43 days during the lockdown. so obviously, if hong kong can really open up orders with the mainland, i would think it's good for its capital markets. shery: talk a little bit about ant group and the potential for regulatory easing across china. we are hearing that the application to become a financial holding could be accepted. what does this tell us about the tech sector are? >> this is one more news adding

to the momentum of chinese regulators trying to this. we have seen news reports about a probe into it finally ending, and now getting the financial holding license, which can pave the way for its ipo. and that is positive. but on the others, we also saw some jitters yesterday on some small regulatory crackdowns, including banning third-party platforms from selling online pharmacy medicines. and that has prompted some stocks like alibaba health to drop a lot. overall, i think is still a bit of a cautious tone, especially with the hawkish fed. shery: the managing editor. those of the stocks we will be watching when the markets open in hong kong and the mainland. for example, tencent, alibaba,

jd.com, we heard from xi jinping, he chaired a meeting that approved promoting the healthy development and payment of fintech sectors. we are watching shares of asian mining and construction machinery. of course, the risk of economic recession has really weighed on sentiment. haidi: coming up in the next hour, we will be speaking to rebecca about why asia is suffering less from inflation. plus, the credit site will be joining us to talk about the credit risk and china amid high volatility. that is it for daybreak asia. we take a look at the start of trading in hong kong, shanghai and shenzhen. this is bloomberg. ♪

♪ david: this is my kitchen table and also my filing system.